[quote=spdrun]People were saying the same this summer when the Dow kissed 12k, and in fall of 2011 when we hit 10.4k. I could easily see 13k or even 12.5k. Don’t underestimate the power of spin, negative headlines, and psychology. The markets have been VERY volatile the past few years. (And thank G-d — more monnnneh to be made that way.)[/quote]
That’s kind of my point. Technical adjustments happen. If it falls to 1,460 and recovers to 1,530 within a few months, that’s a technical correction. It will recover to the mean. It always has. The crash in 2007 wasn’t technical, it was fundamental. P/E for the S&P was over 120. Before the tech crash it was over 40. Both times it reverted to the mean. So despite the technical corrections that will happen, today’s valuation is pretty conservative based on trailing twelve month earnings.
Of course earnings could fall. It very well could happen, maybe even more likely than interest rates rising quickly. But that doesn’t mean todays prices are too high.
